By Jenny W. Hsu

Global oil prices regained ground in Thursday morning trade in Asia, lifted by a weaker greenback and bargain-hunting, but the mismatch in supply and demand remained a drag on sentiment.

The WSJ Dollar Index was last down 0.1% at 86.94. A weaker dollar usually helps oil prices rise because oil transactions are U.S. dollar denominated, and buyers with other currencies will get more oil for their spending.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $44.91 a barrel at 0224 GMT, up $0.21 in the Globex electronic session. November Brent crude on London's ICE Futures exchange rose $0.20 to $47.09 a barrel.

Overnight U.S.-priced oil prices dropped more than 3% following a bigger-than-expected build in U.S. oil inventories last week.

Weekly data from the U.S. Energy Information Administration showed U.S. crude stocks grew by 2.3 million barrel to 1.2 billion barrels in the week ended Aug. 26. The overall inventories of crude and refined products currently stands at 1.4 billion barrels.

"Crude stocks have built counter-seasonally in five of the last six weeks; the key driver has been crude imports, which have increased more than crude production has declined," said Michael Wittner, the chief analyst at Societe Generale.

EIA data also showed U.S. crude imports averaged over 8.5 million barrels a day, 11.4% above the same four-week period last year.

Volatility has dominated that oil market in the past few weeks. Investors and traders were first encouraged by the fact members of the Organization of the Petroleum Exporting Countries have agreed to meet later this month in Algeria to discuss measures to stabilize prices.

However, pessimism returned soon after Iran repeated its stance that it wouldn't comply with any production freeze until its production reaches the pre-sanction levels of 4 million barrels a day. In July, the country reported a daily production of 3.6 million barrels.

"Even though Iran has agreed to attend the meeting, it hasn't shown any enthusiasm whatsoever to a production freeze. Without Iran, Saudi Arabia would not be on board," said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.

Smaller producers, such as Nigeria and Libya, could also reject an output cap at their current levels given their production has been stunted in the past few months due to internal friction.

"There appears to be no new development in the OPEC talks of a production cap but as prices slide toward $40 we may start to hear a pick-up in dialogue," said Stuart Ive, a client manager at the Wellington-based OM Financial.

In the short term, market players will be eyeing the U.S. August job report due Friday for cues. Firms across the country added 177,000 workers to their ranks in August, according to payroll processor Automatic Data Processing Inc. A survey of economists by The Wall Street Journal tips an increase of 180,000.

Analysts say solid growth in U.S. job market would give the federal government more reasons to raise interest rates. Higher rates tend to strengthen the dollar which will add downward pressure on the oil prices.

Nymex reformulated gasoline blendstock for October--the benchmark gasoline contract--rose 68 points to $1.3402 a gallon, while October diesel traded at $1.4317, 60 points higher.

ICE gasoil for September changed hands at $412.25 a metric ton, down $2.25 from Wednesday's settlement.

-- Lisa Beilfuss contributed to this article

Write to Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

August 31, 2016 23:21 ET (03:21 GMT)

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